§ 7709 — Assessments

New York § 7709

• Jurisdiction: New York
• Law ISC: Insurance
• Art. 77: The Life and Health Insurance Company Guaranty Corporation of New York Act

Text

§ 7709. Assessments. (a) For the purpose of providing the funds\nnecessary to carry out the powers and duties of the corporation, the\nboard of directors shall assess the member insurers, separately for each\naccount, at such time and for such amounts as the board finds necessary\nin accordance with the provisions of paragraph three of subsection (c)\nof this section. Assessments shall be due on the date set by the board\nwhich shall be not less than thirty days nor more than sixty days after\nprior written notice to the member insurers. Assessments shall accrue\ninterest at the maximum rate allowed by subdivision one of section 5-501\nof the general obligations law on and after the due date.\n (b) There shall be three classes of assessments, as follows:\n (1) Class A assessments shall be made for the purpose of meeting\nadministrative costs and other general expenses.\n (2) Class B assessments shall be made to the extent necessary to carry\nout the powers and duties of the corporation under section seven\nthousand seven hundred eight of this article with regard to an impaired\nor insolvent domestic insurer.\n (3) Class C assessments shall be made to the extent necessary to carry\nout the powers and duties of the corporation under section seven\nthousand seven hundred eight of this article with regard to an impaired\nor insolvent foreign or alien insurer.\n (c) (1) The amount of any class A assessment shall be determined by\nthe board and may be made on a non pro rata basis. Such assessment shall\nbe credited against future impairment or insolvency assessments. The\nmaximum such assessment against any member insurer in any calendar year\nshall be determined, in accordance with the table set forth below, on\nthe basis of its admitted assets as shown on its annual statement\nrequired by this chapter for the year next preceding the date of such\nassessment:\nCompanies with Admitted Assets of Maximum Assessment\nUp to $50,000,000 $200\n$50,000,000 to $1,000,000,000 $1000\n$1,000,000,000 or more $2000\n (2) The amount of any class B or class C assessment, except for\nassessments related to long-term care insurance, shall be allocated for\nassessment purposes among the accounts in the proportion that the\npremiums received by the impaired or insolvent insurer on the policies\nor contracts covered by each account for the last calendar year\npreceding the assessment in which the impaired or insolvent insurer\nreceived premiums bears to the premiums received by such insurer for\nsuch calendar year on all covered policies. The amount of any class B or\nclass C assessment for long-term care insurance written by the impaired\nor insolvent insurer shall be allocated according to a methodology\nincluded in the plan of operation and approved by the superintendent.\nThe methodology shall provide for fifty percent of the assessment to be\nallocated to health insurance company member insurers and fifty percent\nto be allocated to life insurance company member insurers; provided,\nhowever, that a property/casualty insurer that writes health insurance\nshall be considered a health insurance company member for this purpose.\nClass B and class C assessments against member insurers for each account\nshall be in the proportion that the premiums received on business in\nthis state by each assessed member insurer on policies covered by each\naccount for the three calendar years preceding the assessment bears to\nsuch premiums received on business in this state for such calendar years\nby all assessed member insurers. Class B and Class C assessments against\nmember insurers for the health insurance account shall be further\nreduced for not-for-profit member insurers pursuant to a methodology\nincluded in the plan of operation and approved by the superintendent.\nSuch methodology shall reduce the assessments imposed on not-for-profit\nmember insurers in an amount that, when accounting for appropriate\nfactors, including the value of the tax credits and a factor for the\ntime value of money, results in a percentage of net assessments to\npremiums that is equivalent for not-for-profit member insurers and\nfor-profit member insurers.\n (3) Assessments for funds to meet the requirements of the corporation\nwith respect to an impaired or insolvent insurer shall be made within a\nreasonable time after deemed necessary by the superintendent to\nimplement the purposes of this article. Classification of assessment\nunder subsection (b) of this section and computation of assessments\nunder this subsection shall be made with a reasonable degree of\naccuracy, recognizing that exact determinations may not always be\npossible.\n (d) The corporation may abate or defer, in whole or in part, the\nassessment of a member insurer if, in the opinion of the board, payment\nof the assessment would endanger the ability of the member insurer to\nfulfill its contractual obligations. In the event an assessment against\na member insurer is abated, or deferred in whole or in part, the amount\nby which such assessment is abated or deferred may be assessed against\nthe other member insurers in a manner consistent with the basis for\nassessments set forth in this section.\n (e) (1) With respect to a member insurer that is a domestic insurer\nand is subject to an order of rehabilitation under article seventy-four\nof this chapter as of March first, two thousand twelve, the total\nassessment against all member insurers for impairments and insolvencies,\nless the amount of refunds (not including interest) to member insurers\npursuant to subsection (f) of this section, shall be five hundred\nfifty-eight million dollars; provided, however, that such five hundred\nfifty-eight million dollar total shall be subject to reduction in an\namount, if any, determined by the superintendent, on a date not earlier\nthan twelve months after the entry of an order of liquidation with\nrespect to such domestic insurer, to be not needed for the corporation\nto be able to pay its obligations and reasonable expenses in connection\nwith the liquidation of such domestic insurer, but in no event shall\nsuch reduction exceed fifty-eight million dollars.\n (2) The total of all assessments upon a member insurer for each\naccount shall not in any one calendar year exceed two percent of such\ninsurer's premiums received in this state during the calendar year\npreceding the assessment on the policies covered by the account. If the\nmaximum assessment, together with the other assets of the corporation in\neither account, does not provide in any one year in either account an\namount sufficient to carry out the responsibilities of the corporation,\nthe necessary additional funds shall be assessed as soon thereafter as\npermitted by this article.\n (f) The board may, by an equitable method as established in the plan\nof operation, refund to member insurers, by retirement of certificates\nof contribution in proportion to the contribution of each insurer to\nthat account, the amount by which the assets of the account exceed the\namount the board finds necessary to carry out during the coming year the\nobligations of the corporation with regard to that account, including\nassets accruing from net realized capital gains and income from\ninvestments. A reasonable amount may be retained in any account to\nprovide funds for the continuing expenses of the corporation and for\nfuture losses if refunds are impractical.\n (g) It shall be proper for any member insurer, in determining its\npremium rates and policy owner dividends as to any kind of insurance\nwithin the scope of this article, to consider the amount reasonably\nnecessary to meet its assessment obligations under this article with\nrespect to insurers which have become impaired or insolvent.\n (h) The corporation shall issue to each insurer paying an assessment\nunder this article, other than a class A assessment, a certificate of\ncontribution, in a form prescribed by the superintendent, for the amount\nof the assessment so paid. All outstanding certificates shall be of\nequal dignity and priority irrespective of amounts or dates of issue. A\ncertificate of contribution may be shown by the insurer in its financial\nstatement as an asset in such form and for such amount, if any, and\nperiod of time as the superintendent may approve.\n